The SEC has completed a review of Berkshire Hathaway's annual earnings report for 2009 after Warren Buffett's company answered accounting questions raised by the regulatory agency.

In a letter dated September 8, and posted today by the SEC on its EDGAR website, regulators tell Berkshire their review of the company's Form 10-K for 2009 has been completed and they "have no further comments at this time."

In a letter dated April 7 to Berkshire, the SEC notes that the company had reported $1.86 billion in unrealized losses for stocks that had "been in an unrealized loss position for at least 12 months."

The SEC wrote that while it knows Berkshire doesn't use a "bright-line test" to determine if losses are temporary, the "duration of unrealized losses in your portfolio appears to be a strong indication that these losses are not temporary." Under accounting rules, non-temporary losses would need to be written-down and reported as an actual loss, even if the shares are not sold.

In a May 7 letter to the SEC, Berkshire CFO Marc Hamburg responded that the amount of time a stock has been in the red is "one factor, but not the only factor" when deciding if losses are temporary or not.

He noted that about 77 percent of the $1.8 billion in 12-month-plus unrealized losses were attributable to two stocks: Kraft Foods and U.S. Bancorp . Both positions were "principally acquired" in 2006 and 2007.

As of December 31, Berkshire's unrealized loss on Kraft was $789 million, or 18 percent of its cost. Unrealized losses on U.S. Bancorp totaled $646 million, or 27 percent of cost.

Hamburg writes that as of that date, Berkshire had concluded both companies had "financially sound" underlying businesses and "significant future earnings potential" that made it "likely their stock prices would eventually exceed our original cost."

Noting that in the first quarter of 2010, Kraft's stock was up 11.3 percent and U.S. Bancorp had advanced 15.0 percent, Berkshire said it was "reasonably possible" both stocks would "recover to our cost within the next one to two years."

And, in keeping with its well-known buy-and-hold philosophy, Berkshire said it had the "ability and intent" to not sell the stocks until they did recover.

As a result, Berkshire argued that its decision not to write-down the investments was "appropriate" and didn't violate accounting rules. It promised to keep looking at its unrealized losses and didn't rule out a write-down in the future.

That was apparently enough for the SEC.

Berkshire's faith in Kraft (despite Buffett's objections to the food giant's acquisition of Cadbury) has been rewarded with a 19.5 percent stock price gain so far this year.

U.S. Bancorp's stock has further to go for its recovery, giving up most of its gains from earlier in the year to leave it with a 4.3 percent YTD advance.